1. Main points

In the three months to October 2018, the quantity bought in retail sales increased by 0.4% when compared with the previous three months; a slowdown to growth when compared with the strong summer sales, which reached a high of 2.3% in the three months to July.

In October 2018, the quantity bought fell by 0.5% when compared with September 2018, with a strong decline of 3.0% in household goods stores following a particularly strong August and September.

When compared with the previous year, the quantity bought in October 2018 increased by 2.2%, with growth across all sectors except fuel, which fell by 1.8%.

The year-on-year average store price for fuel continued to increase in October 2018 to 11.4%; this is the 26th consecutive month to show an increase.

Online sales as a total of all retailing increased to 18.0% from the 17.7% reported in September 2018, with textile, clothing and footwear stores continuing a record proportion of online sales at 18.2%; this was despite a fall in total retail spending in this sector.

2. Things you need to know about this release

This bulletin presents estimates of the quantity bought (volume) and amount spent (value) in the retail industry for the four-week period 30 September 2018 to 27 October 2018.

Unless otherwise stated, the estimates in this release are seasonally adjusted.

The Retail Sales Index (RSI) measures the value and volume of retail sales in Great Britain on a monthly basis. Data are collected from businesses in the retail industry and the survey’s results are used to produce seasonally adjusted monthly, quarterly and annual estimates of output in the retail industry at current price and at chained volume measures (removing the effect of price changes).

The RSI is an important economic indicator and one of the earliest short-term measures of economic activity. It is used in the compilation of the national accounts and widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty’s Treasury to assist in informed decision- and policy-making.

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In the three months to October 2018, the amount spent increased by 0.8%, while the quantity of goods bought increased by 0.4% when compared with the previous three months. When compared with the same period a year earlier, both the amount spent and the quantity bought in retail sales increased at a stronger rate (Table 1).

In contrast, as the only measure to show a decline, the monthly growth rate fell by 0.5% in both the amount spent and the quantity bought.

Looking at the longer-term trend for the monthly and the three-monthly path can explain the contrasting picture seen for these movements (Figure 1).

Figure 1: Rolling three-month on three-month and month-on-month index for the quantity bought in all retailing

Great Britain, October 2013 to October 2018; seasonally adjusted

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Figure 1 shows the rolling three-month on three-month index against the more volatile monthly path for the quantity bought.

From October 2013, the quantity of goods bought increased at a steady rate to the end of 2016. With a short period of contraction at the beginning of 2017, the underlying pattern returned to a slower rate of growth to March 2018.

From April 2018, the three-month on three-month movement increased at a faster rate due to strong monthly growths in April at 1.3% and May at 1.6%. In the latest months, spending has slowed and in September and October 2018 fell by 0.4% and 0.5% respectively, resulting in a general slowdown in the three-month on three-month movement. This slowdown to growth is compared with the strong summer sales, which reached a high of 2.3% in the three months to July.

Table 2 looks at both month-on-month and three-month on three-month growth for each retail sector.

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Table 2 shows the contrasting picture for the monthly and three-month on three-month growth rates.

When compared with the previous month, the quantity of goods bought in October 2018 declined across a range of sectors. Non-food stores were the largest contribution to this fall due to declines in all store types except for department stores, which remained broadly flat at 0.1%. Non-store retailing also remained flat when compared with September.

The strong monthly decline of 3.0% in household goods stores follows very strong growth in August at 4.3% and September at 2.4%, resulting in a strong three-month on three-month increase of 3.5% in October.

Feedback from clothing retailers suggested that the monthly fall of 1.0% could be attributed to the mild October weather, which had seen consumers reluctant to purchase winter ranges.

While goods bought in food stores increased by 0.4% on the month, this followed two monthly declines and resulted in a fall of 0.7% in their three-month on three-month growth rate. This, along with a fall of 1.7% in fuel contributed to the overall slowdown of 0.4% for the total three-month on three-month growth rate. This was a slowdown from the strong summer sales, which reached a high of 2.3% in the three months to July.

Figure 2: Contributions to month-on-month growth in the quantity bought and amount spent in the four main retail sectors

Great Britain, October 2018 compared with September 2018

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Figure 2 displays the contribution to month-on-month growth with both the quantity bought and the amount spent for October 2018 at negative 0.5 percentage points compared with September.

Non-food stores were the largest contributor towards the overall fall with the amount spent and quantity bought both reporting negative contributions of negative 0.6 and negative 0.5 percentage points. This negative contribution is a consequence of the month-on-month falls in growth in all sectors apart from department stores (Table 2).

Food stores were the only sector to show a positive contribution for both the amount spent at 0.1 percentage points and the quantity bought at 0.2 percentage points.

Figure 3: Contributions to year-on-year growth in the quantity bought and amount spent in the four main retail sectors

Great Britain, October 2018 compared with October 2017

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In October 2018, all four main sectors contributed positively to the growth in the amount spent, resulting in a 4.0 percentage point year-on-year increase.

Three of the main sectors had a positive contribution to the quantity bought, resulting in a 2.2 percentage point contribution. However, fuel contributed negative 0.2 percentage points to overall growth.

7. Focus on fuel

The amount spent on fuel has continued to rise in recent years, with year-on-year increases in each month from May 2016. In October 2018, the year-on-year growth rate increased by 9.5%.

Using the value (amount spent) and volume (quantity bought) of sales we can derive an average store price, also known as the implied price deflator.

From September 2016, average fuel prices have also increased, with a year-on-year growth of 11.4% in October 2018. This is the 26th consecutive month to show an increase in the average store price.

When looking at the quantity bought in October, there has been a year-on-year decrease in the amount of fuel purchased at negative 1.8%. The increased value sales are therefore a reflection of rising prices. The Consumer Prices Index (CPI) reveals that motor fuels made a small upward contribution between September and October 2018, with prices rising more than they did a year ago.

Figure 4: The amount spent and quantity bought for fuel along with the average store price

Great Britain, October 2016 to October 2018, amount spent and quantity bought seasonally adjusted; average store price non-seasonally adjusted

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Looking at the underlying pattern for the amount spent and quantity bought in fuel stores, while there is some volatility in the series, the quantity bought remains relatively flat over time as consumers’ fuel consumption remained somewhat stable as an essential item (Figure 4).

In contrast, the amount spent on fuel increased in recent months as a consequence of increased fuel prices as the quantity bought shows a decrease.

The sharp fall in March 2018 for both the amount spent and quantity bought can be explained by the widespread snow experienced. The Met Office reported that “many roads were blocked or impassable” resulting in reduced fuel consumption. There were similar sharp decreases in March 2017, particularly for the quantity of fuel bought. This followed very strong year-on-year fuel price increases in February and March 2017 at 18.4% and 16.3% respectively.

Figure 5: Year-on-year percentage change for the average store price of fuel

Great Britain, October 2017 to October 2018; seasonally adjusted

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Focusing on October 2017 to October 2018, Figure 5 illustrates that the average store price for fuel increased at a slower rate in 2017, dropping to 0.5% in March 2018. From April, a stronger rate of growth is seen in the average store price.

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Table 3 shows month-on-month and year-on-year growth rates for online retailing, by sector, in addition to the proportion of online sales to all retail sales. The percentage weights indicate where money is spent online.

Online sales increased by 12.6% for the amount spent in October 2018 when compared with October 2017, with all sectors except food showing strong year-on-year growth. Household goods stores reported the largest year-on-year growth of 26.5% followed by other stores with a growth of 25.8%.

The month-on-month picture was also one of growth with online sales increasing by 1.2% when compared with September 2018. Other stores reported the largest month-on-month growth of 6.1%; computers and telecommunications stores within this sector reported strong growth, with feedback from retailers attributing the growth to the release of new smartphone handsets.

Online sales as a total of all retailing increased to 18.0% from the 17.7% reported in September 2018, with all sectors reporting increases in their proportion of online sales in October. Textile, clothing and footwear stores continued with a record proportion of online retailing at 18.2% in October. While total retail spending in this sector reported a fall in October, consumers increased their online spending for the goods that they did purchase in clothing stores.

Eurostat also published their latest estimates of the Volume of retail trade (PDF, 503KB) across the European Union on 7 November 2018 for September 2018. This shows the seasonally adjusted volume of retail trade in both the euro area (EA19) and EU28 when compared with August 2018.

10. Quality and methodology

Our Monthly Business Survey (MBS) for retail sales measures output from the retail industry in Great Britain. It samples 5,000 businesses, with all businesses employing over 100 people or with an annual turnover of more than £60 million receiving an online questionnaire every month.

Further qualitative data or information and summary tables can be found in the attached datasets. This includes data on: